Merk Medco Merger Essay

1925 Words 8 Pages
| You Decide | FIN 561-60619 | Mergers and Acquisitions, Week 3Professor Gene Smith, PhD | Melissa Walter | 7/27/2014 |


Abstract Merck & Company (Merck) is evaluating the possible acquisition of Medco Containment Services Incorporated (Medco). The Chief Operating Officer, Executive Vice President of Sales and Marketing, and the Chief Financial Officer have all stated their thoughts and concerns regarding this matter. It is my job to make the final recommendation to the Board of Trustees.

Executive Summary Merck is a leading pharmaceutical manufacturer and Medco is a leading pharmacy benefits manager. Both companies have a strong hold on their piece of the market. In 1992, Merck had revenue of $9.7 billion
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In 1827, Heinrich Emmanuel Merck converted the pharmacy into a drug manufactory producing morphine, codeine, and cocaine. The company became known as E. Merck AG. Entry into the United States came in 1887 when Theodore Weicker opened the first sales office. Weicker was joined by George Merck in 1891; and in 1899 the two acquired a 150-acre plant site in Rahway, New Jersey. This location was the company headquarters and also housed the research laboratories and chemical production facilities until the 1990’s.1 During the 1900’s a series of important events occurred allowing Merck to become a leader in the pharmaceutical industry. One of these events was the merger with Powers-Weghtman-Rosengarten, a pharmaceutical firm in 1927. It was after this merger that George W. Merck incorporated the company as Merck & Co., Inc. The other important merger was that of Sharp & Dohme, Incorporated in 1953. This merger allowed Merck to expand its distribution network and gain new customers.1 Important drugs were also created during this time period. The discovery of vitamin B12 was the first. Cortisone and streptomycin, an antibiotic used for tuberculosis and other infections followed. Vasotec was introduced in 1985 and was used to treat congestive heart failure. It was Merck’s first billion-dollar-a-year drug. In 1992 Merck

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